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What investors should know about investing in topical ETFs

Jay Jacobs of Global X.

With over a third of thematic ETFs on the market having launched in the past year and a half alone, the space is rapidly expanding from its tech-focused origins, said senior vice president and head of research and strategy of the company told CNBC’s “Edge ETF” this week.

“I think the mistake some investors can make is thinking that thematic investing only looks at technology,” Jacobs said in an interview on Monday.

Global X’s two fastest growing ETFs this year, U.S. Infrastructure Development (PAVE) and Lithium & Battery Technology (LIT), without much exposure to technology, Jacobs added.

“Looking outside the technology in the thematic space, I think that’s the key for investors to find that diversification,” he said.

Many heads Thematic ETFs Fall year-to-date, so investors should also weigh the potential risks before buying, Alex Shepard, founding partner of ETF Action, said in the same interview.

“The fact that there can be increased volatility and there can be increased risk, that’s what you’re after when looking for above-average returns outside of passive, range-based indicators. this wide,” he said.

However, new investment styles can help reduce that risk like never before, Shepard said.

“Just because the majority of products on the market are considered passive, that doesn’t mean they aren’t actively used around the core,” he said.

Only about $300 billion in assets follows aggressive strategies, Shepard says.

“Ten, 20 years ago, investors and advisors were not creative,” he said. “Now you’re looking at nearly 2,800 ETFs listed in the US. They now have the tools to tilt their portfolios one way or another based on their risk, goals, and that’s not yet there. ever in history.”

https://www.cnbc.com/2021/12/18/what-investors-should-know-about-investing-in-thematic-etfs.html What investors should know about investing in topical ETFs

Sunbiz

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